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Nomura Stays Neutral on BAL

Nomura has maintained its 'Neutral' rating on Bajaj Auto with a target price of Rs 1,966. Bajaj's 4QFY13 margins came in at 17.6% versus the estimate 18.8%, leading to 7% disappointment at EBITDA level.

"We note that industry volume growth has slowed over the last few months in both domestic and export markets. Given this, we cut our FY14F overall volume estimates by ~7% to 4.5mn units. We now factor in 4% volume growth in the domestic motorcycle market in FY14F versus 8% earlier" Nomura said in a report.

Nomura also reduced their FY14F export volume growth assumption to 11% from 16% earlier. In such a scenario, the company may have to pass on nearly half of the benefits from a weaker rupee to its export customers.

ITC Stays a Buy: Edelweiss

Edelweiss has maintained a 'Buy' rating on ITC and set a target price of Rs 386. ITC's Q4FY13 numbers sprang a pleasant surprise, beating our sales and PAT expectations 4% and 5%, respectively. Key positives include: ~2.5% yoy growth in cigarette volume (1.5% yoy growth in Q3FY13, flat in H1FY13); and FMCG business turning EBIT positive for the first time (as expected).

Key negatives include: muted sales growth in hotel and paper (capacity addition should aid improvement in 2-3 quarters); and margin dip in hotel, agri and paper. Post Union Budget 2014 excise hike of 18% and VAT hike in various state budgets, ITC took ~18% price hike with no change in the 64mm category, in line with our expectation, to help maintain EBIT margin.

Morgan Stanley Pegs UBI at Rs 185

Morgan Stanley has maintained an 'Underweight' rating on Union Bank of India and set target price of Rs 185 using a probability weighted three-phase residual income model - a five-year high growth period, a 10-year maturity period, followed by a declining period.

The balance sheet at Union Bank is weak, given 8.3% impaired loan ratio and a core tier 1 of 7.4%. Infra exposure is high at 17% of loans. Core revenues were weak as NIMs compressed 6 bps qoq and fee income declined yoy.

Further, the revenue growth outlook is weak - loan growth and hence fees are likely to remain sluggish, given weak macro and as mgmt is guiding to FY14 NIMs at ~2.9% versus 3% for FY13. Costs grew faster, and there is meaningful upside to costs as the bank starts making higher provisions for wage hike.

CS Neutral on MahiSat

Credit Suisse has maintained its 'Neutral' rating on Mahindra Satyam with a target price of Rs 122. "While we continue to like Satyam's momentum with respect to deal wins, we remain concerned with Tech Mahindra's large telecom exposure," Credit Suisse said in a report.